Technical Analysis: Gold bears should await $1,721 break for fresh entries

Although gold fades bounce off six-week-old horizontal support surrounding $1,724, a downward sloping trend line from August 26, near $1,721, becomes a short-term key level for the bears to watch amid weak RSI. Should the quote drops below $1,721, the $1,700 threshold may become an intermediate halt during the fall towards the yearly low. It’s worth noting that the US policymakers are bracing for the infrastructure bill passage, as well as debt ceiling extension, after successfully avoiding a government shutdown. Should they win, the market sentiment will improve, underpinning the gold’s much-needed corrective pullback.

During the commodity’s bounce off multi-day-old support, 50-SMA could challenge the bulls at around $1,753. However, a monthly resistance line surrounding $1,768 will be a tough nut to crack for the gold bulls. In a case where the quote stays firmer past $1,768, the metal confirms a bullish chart pattern called falling wedge, which in turn favors the run-up towards cross the $1,834 key hurdle. Before that, the $1,800 round figure may entertain the buyers.

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